Moody's downgraded its corporate family rating on Tianqi Lithium Corp. to Ba3 from Ba2 citing high leverage and weak capital structure outlook until the next year.
The energy materials company's leverage raised due to its acquisition of a 23.8% stake in Sociedad Quimica y Minera de Chile SA in December 2018. It has planned to finance the acquisition through loans.
Tianqi proposed a rights issue in August to reduce its leverage. While Moody's expects the action could lower its debt-to-EBITDA to about 6.2x in 2019 and to 5.2x in 2020, it added that the completion of the issue is subject to capital market execution and market conditions.
The Ba3 rating reflects the company's strong market position and profitability, counterbalanced by its limited product concentration in lithium minerals and lithium chemicals.
The rating agency maintained a negative outlook on the company, citing its uncertain refinancing plans and weak liquidity position.
